Islamic banking will enhance investment in critical sectors- expert

NAN-HE-30
Investment

By Lucy Nwachukwu/Cecilia Ologunagba

Abuja, May 24, 2017 (NAN) Dr Bashir Aliyu, the Director, Centre for Islamic Civilisation and Inter-faith Dialogue, Bayero University says Islamic banking and finance will enhance investment in the critical sectors of the economy.
Aliyu said this at the sensitisation workshop on “Fundamentals of Islamic Economics, Banking and Finance’’ organised for  journalists on Wednesday in Abuja.
Aliyu, while giving a presentation on “the History, Evolution and Contribution of Islamic Finance’’, said that Islamic finance had the potential of contributing to financial services in Nigeria.
He said that some people misunderstood the benefits of establishing Islamic banks as an agenda to islamise the country.
“Islamic banking is not an agenda to Islamise the country but to complement the conventional banking services.
“The services that Islamic banks will render has the capacity to boost investment in the critical sectors of the economy through the use of `Sukuk’, a new financial instrument.’’

Sukuk (Islamic bonds), is structured in such a way as to generate returns to investors without infringing Islamic law that prohibits riba (interest).
Sukuk represents undivided shares in the ownership of tangible assets relating to particular projects or special investment activity.

He said United Emirate had been able to use Sukuk to finance some of its major projects, citing the Dubai international airport expansion project as an example.
According to him, Islamic banking is tied to assets and infrastructure and prudence use of financial resources.

Aliyu said that establishment of the banks would enhance financial inclusion in the country’s economy.
“A large number of Muslims that had hitherto steered away from the organised conventional financial services due to their aversion to interest and interest-based products will be integrated in the formal economic sectors.
“Some Muslims have also abandoned conventional banking because of religious reasons but with the establishment of Jaiz Bank (Islamic Bank), they have now embraced banking,’’ he said.

The don said that the establishment of Islamic banking would also deepen the financial market, new market and institutions players such as Islamic asset management, and money market would be introduced.
“It will bring new competition in the banking industry which is expected to engender a concomitant reduction of interest,’’ he said.

Aliyu further said that the banks would enhance oversight and regulation through an added component of corporate governance, which were the Shariah Supervisory Board /Commission.

According to him, Nigerians can take the opportunity of Takful (Islamic Insurance) to embrace insurance in the country.

“There is low penetration of insurance in the country.’’
He also said that Islamic banking had grown faster than its conventional counterpart in terms of asset volume.

The News Agency of Nigeria (NAN) reports that the workshop was organised by Banking and Finance Institute of Nigeria in collaboration with Nigeria Union of Journalists. (NAN)
LCN/CIA/EEE

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Edited by Ese E. Ekama